When Nate Munk began developing his first Alexa skill in 2017 for a competition, he was still in college. Nate was intrigued by Alexa because it was new, fun, and engaging all at the same time. He placed third in the competition and won two thousand dollars in prize money – the reward, along with the prospect of building new experiences, kept him motivated to continue building skills in his spare time.
"There was a lot of opportunity to build something beneficial that customers would actually use."
Growing the business
Nate's skill, Escape Jurassic Island, was promoted in an Alexa newsletter a few months after the competition. The skill saw a surge in customer adoption and positive reviews. Nate decided to branch out and develop ambient sound skills. He researched the existing ambient sound skills, read reviews, and engaged with users to discover ways to differentiate his skill from the competition. A few weeks after the initial idea, Nate published his first ambient sounds skill in October 2019. He now maintains 27 skills with over 15,000 monthly active users, and his most popular Alexa skill is Relaxing Sleep Sounds.
After his skills began to grow in popularity, Nate began to think about monetizing them so that he could grow revenue with Alexa. After conducting research on the plethora of monetization options available to skill developers, Nate decided to use In-Skill purchasing (ISP). ISP lets developers sell premium content, such as high-quality and longer duration ambient sounds, game features, and interactive stories in custom skills for a fee. Customers pay for premium content by using the secure payment options associated with their Amazon account.
"I started making a few dollars a month to start, which was enough for me to realize there was an opportunity," says Nate. "I just needed to try new things and adjust to figure out what works and what doesn't."
Monetizing an ambient sounds skill is more than a "nice-to-have." For popular skills, having a meaningful revenue stream is a "must-have." Because users typically listen to ambient sounds all night, streaming costs can run high for popular skills.
Nate offered a 5-hour loop for free or a 10-hour loop with additional features for the Gold Edition premium subscription. He could still differentiate his product because other skills offered only 1-hour loops for free.
By the second day of incorporating ISP, Nate had his first subscriber. From there, Nate was inspired to continue improving the customer experience and open up more avenues for monetization. Soon, he was able to grow his revenue to a point where he was not only able to cover streaming costs but also grow his business.
Below, Nate offers tips to Alexa Skill Developers to get the most out of ISP.
Tip #1: Provide quality content
Nate says that the first step for any Alexa Skills developer is to provide quality content.
For Relaxing Sleep Sounds, Nate's Gold Edition subscribers get higher-quality audio in addition to the longer loop duration. They also get the ability to transition to another sound, like birds chirping. Nate continually updates the sound library to keep providing value to paid subscribers.
"I've found that the more value I provide, the more likely users will invest in premium content," says Nate.
To help inform his development, Nate incorporates emailed feedback from users. He also keeps an eye on what his competitors are releasing and frequently reads reviews for both his and his competitors' skills.
"My customers help me figure out what to build and how to make it as useful as possible," says Nate. "Having that open line of communication with my customers has been crucial."
Tip #2: Test and refine upsell message, placement, and frequency
Nate initially presented an upsell message a predetermined number of times a user opened one of his Relaxing Sleep Sounds skills. Because these messages could be disruptive when users were trying to sleep, Nate started experimenting with the frequency of upsell messaging. He analyzed analytics in the Alexa developer console to see how it impacted conversion rates.
After a couple of dozen variations, Nate found that presenting an upsell message the first time users opened the skill increased conversion rates.
"I've found that to work best for ambient noise skills," says Nate. "I do not upsell again after that because I do not want to disturb my users, especially when they are getting ready for bed or getting their kids ready for sleep."
He also tested the length of the upsell message and found that when it comes to voice, brevity is everything. His current upsell message is a concise, 20-second summary of what the Gold Edition subscription offers. He plays sounds in the background to demonstrate the quality and the transition to a wake-up sound.
The length of the trial period is another lever that developers can use to grow revenue. Nate also offers a long trial period of 31 days so that users have adequate time to understand the benefits of the premium subscription. Now, across the Relaxing Sleep Sounds skills, 20–30 percent of users sign up for the free trial after listening to the upsell message, while a majority of those users pay for at least one month after the trial ends.
Nate recommends that developers experiment with different timing, content, and trial period strategies because every skill is unique. For his games skills, he found the most effective strategy was to present an upsell message the third time a user opens the skill and every tenth time after that.
"I looked at the developer console analytics several times a day for several months to understand how my upsell messages were affecting conversion rates," says Nate. "By experimenting over the course of a few months, I found a balance where I encouraged people to accept a free trial without bothering them or creating a negative experience."
Tip #3: Experiment with pricing
For pricing, Nate recommends experimenting to see the impact on conversion and retention rates. Most of his skills charge $1.99 for the premium experience. He found that pricing lower than that didn't impact conversion rates at all, but pricing higher than that caused a steep drop-off.
"Having a good understanding of how the changes that you make affect all the different metrics across the monetization spectrum is important to keep you from missing out on potential paying customers," says Nate.
What Nate likes the most about developing for Alexa is seeing the positive impact his innovations have on the lives of people around the world – starting at home.
He loves seeing his six-year-old interact with the technology. He also loves hearing from customers who say his skills have helped them relax and overcome sleeping difficulties. "I've always been an entrepreneur and love learning and building," says Nate.
"It's fun to build for Alexa, and there are so many things you can do."